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Board Member Involvement and Oversight - Board Members' Series (Part 1)

Posted by Chris Valponi, CPA on Feb 4, 2019 4:18:00 PM

Part 1 of a 5 Part Series

Do you ever wonder what challenges Board members are facing and how they are board member involvement and oversightdealing with those challenges? Zinner and Co. plays a key role in helping organizations and their management team to overcome a wide range of obstacles. Our unique position of working with multiple entities allows us to take our experience and apply it to you and your organization.

So you’re a board member, now what?

People make the important decision to become a board member of a not-for-profit organization for a wide variety of reasons:

    • They have a passion for a cause
    • They have a love for their community
    • They have a set of specific skills that can be used to help others

These are all great reasons to join a Board, but what can you do to ensure that your membership is effective and valuable to your organization and provides a rewarding experience for all parties? 

We can start by focusing on how new Board members can get involved in their organization and how existing Board members can improve their oversight and involvement.

Maintain a Proper Commitment – Through our experience we have found that Board member commitment has a significant and direct impact on the success of a not-for-profit organization. As work and personal commitments change it becomes necessary to find that balance of time that allows you to properly support your organization.

Efficient and Valuable Communications – Communications among Board members and between Board members and the management team is one of the most important aspects of the position you hold. First and foremost Boards should meet monthly or at least quarterly with regular attendance and participation by all Board members. The following suggestions should be considered:
    • Familiarize yourself with the organizations major initiatives and the organization’s mission statement and governing instruments, such as the articles of incorporation and bylaws.
    • Maintain a financial knowledge and ability to sufficiently approve budgets, review financial statements and operating reports, authorize contractual, banking and financial commitments. The Board as a whole should have adequate skills in the areas of law, accounting, finance and personnel, even though any one member may not be skilled in all areas.
    • Request that a Board meeting agenda be provided in advance of all Board meetings, with enough time to perform any applicable research on meeting topics.
    • All Boards should keep detailed minutes of each Board meeting, which should be reviewed and approved as soon as reasonably possible after all Board meetings. As an individual you should review the minutes of the previous meeting for accuracy.

Familiarize Yourself with External Factors – There are many external factors affecting most not-for-profit organizations. Take the time to understand the key components of any outside relationship, because a Board member who is knowledgeable can hold members of management accountable and can make informed decisions. The following factors should be considered:
    • Vendor contracts and agreements
    • Grant terms or other requirements of revenue sources
    • Laws and regulations
    • Lease and loan agreements
    • Compliance requirements of governmental agencies

Be Visible – Try stopping by the organization’s offices unannounced for a friendly and casual visit with management. Board members can even have a presence in the organization without actually being physically present.

    • Join a committee of the Board. It is common for Boards to develop committees to focus efforts and talents on a specific area within the organization. You were asked to join the Board because of your skill set and you should join a committee that will utilize that skill set.
    • Keep management up-to-date on issues that may have an effect on the organization in the future.
    • Get out in the community – Not-for-profits operate in the community environment, so go to events and talk with people in the community to gain a better idea of how your organization can better serve them.
 
Oversight and Approval on the Transaction Level – Board members should be involved in the over sight and approval of significant transactions and processes such as: new loans, property and equipment purchases, advances, payments to key employees, payments over certain dollar thresholds and all other significant transactions. Proper Board member review by designated members that should be considered includes:
    • Examining supporting documentation such as purchase orders, invoices and vendor contracts
    • Signing all checks or all checks over a certain dollar amount
    • Reviewing budget vs. actual, as well as internal financial statements on a regular basis
    • Having the bank statements mailed directly to a Board member’s home to be opened and reviewed before providing them to management. This simple task can send an important message to management, a message that some one is looking at the cash flows of the organization.

A proper review and approval will help make certain that improper transactions are not occurring or they are being detected in a timely manner. Help your organization draft a policy for reviewing and approving such transactions.

The above guidelines and recommendations are the essentials to developing a great base as you grow through your membership and take on new and more specific challenges. 
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Topics: Audit and Assurance Department, non-profits

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